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tv   Tonight From Washington  CSPAN  January 15, 2013 8:00pm-11:00pm EST

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positions you take but by the service you give. learn the facts, stand up for what you think is right, and fight hard. remember, today's opponent is tomorrow's ally, and nobody, not even coach snyder wins every game. listen, learn, and lead so that we may move forward together toward a more prosperous, a more just, and a more decent kansas. keyneses' is the heart of america. let's make our place a shining example for the nation to follow. it is within our reach to see that all of our children can read. it is within our reach to strengthen marriages and families. it is within our reach to reduce taxes. it is within our reach to lead in job growth and energy independence. it is within our reach to balance our budget and meet the needs of our people.
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our place, kan., must show the path, the difficult path for america to go in these troubled times. ..
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the and >> we and shannon >> thank you. >> that was governors sam brownback with the state of the state address. we now go to senator anthony headley for the democratic response to enact we have been
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talking that the string that we have time. we have talked about how i have a dream. we will somehow realizes principles and the declaration of independence. i think he was just inspired by that moment. >> sunday on "after words", clairborne carson recalls his march on washington. it is part of three days of the tv this weekend on monday featuring authors and books from the inauguration. president obama, and martin luther king jr. >> every weekend latest nonfiction authors and books are
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featured on booktv. you can see past programs and schedules our website and you can join in the conversation on social media sites. >> congress talked about avoiding the death sequester. congressman levin is the ranking member on house ways and means committee. is that this is sponsored by the christian science monitor. it is one hour. >> thank you for coming. i am david cote from the monitor. our guest this morning is representative sander levin of. he is a detroit native. he has a masters in
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international relations from harvard and was elected to the michigan state senate in 1964 and service the senate minority leader. under the current administration he was under the agency for international development and was elected to the house in 1980 to four years after his brother carl was elected to the senate. in march 2010, he won the battle of chairman of the ways and means committee. there is no embargo and breakfast is over except that c-span has agreed not to use video of the sessions session for at least two hours after the represent. to help c-span, if you happen to be sitting there microphone and you ask a question, pullet close to you. if not, they will come around you with a boom microphone. finally, if you send me a signal, i will do my best to
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answer questions and comments. >> thank you all for joining us. i was thinking yesterday as i was listening to the president about past conflicts over the deficit reduction. mark and i were talking about how far back we go. it is a few years. and i remembered him of the earlier sessions that we had. gramm-rudman one and two and gran member holland. i've googled it for all of them. and i was thinking there have
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been two major changes. number one is the dataset that is clearly much greater. the deficit is much greater. when i think of the ways and means committee, would change their has been in the composition. the ranking member at a time when i started went to the world bank. i worked with bill on trade. he was handling the tax material mainly. and bill was working on health care at the time. i think a second major change is very much effective today and affects us today. it is this change in composition of the republican party.
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i think it has moved very much more to the right. i think that makes it very difficult to handle the problems that we have before us. let me comment briefly on where we are. you offer the president yesterday. we have had spending cuts of a trillion and a half dollars. it comes from the budget control act. we have a trillion and a half of spending cuts. essentially in terms of deficit
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reduction, and has over 600 billion. the account interest, we have essentially of a deficit reduction of $2.5 trillion. the president set a goal of an additional $1 trillion in deficit reduction. if we are going to essentially stabilize the dead, we say it is 73% of gdp, we are going to have to do in the next period of time have a deficit reduction of about one fourth -- $1.4 trillion. for me, that is the goal that we should set. the argument we are having in addition to the deficit target should be, we are having a major
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battle over what should be the competition of deficit reduction. the president yesterday talked about having balance. i think that us democrats, that is the key. there has to be a mixture of spending cuts and of revenue. we need a balance for three reasons. number one is in order to promote economic growth. in my judgment, it all comes from cuts in programs, you will avoid you.
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you recently to income inequality in their has a startling change in the last years and the middle class has essentially been in and figure really is that in 2000, will 1%. the reason relates to discretionary spending. i believe that the discretionary spending should be under 2% and it will essentially be cut close to happen the next decade. we are talking about education programs and health programs, including nih research. we are talking about
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infrastructure. we are talking about key domestic discretionary programs that are so important for the lives of the vast majority of the american people. as the president subsequently yesterday, the debt ceiling essentially must not be used as a weapon. it essentially takes on an is the basic full faith and credit of the united states of america. the president has made so clear what would be at stake if that
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were to happen. i just believe that it is so critical that that not occurred. you know, i have been through these battles for many decades. i don't remember anyone essentially saying we should go over the cliff. the consequences would be, i think, shamanic and potentially cataclysmic. for the republicans that say let's do it, i think i would be a mistake with foreseeable consequences. the federal reserve has said the responsible physician is we should not forget.
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>> the president says he's not going to talk about the debt ceiling, speaker boehner said it can be done unless we cut spending at the same time. what are the odds of avoiding going over the fiscal cliff given where both parties are. >> they are going with the american economy and the global economy.
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closer you get to the fiscal cliff, i think the less likely it is that the u.s. will be funded over and. >> okay, let me ask about tax reform. mutual political last week that a balanced approach to placing the sequester with benefits and revenues should accelerate tax reform, and i believe it's fully possible this year we work on a bipartisan basis. how does that square with the people that say that the tax reform is going to lose out because of scheduling and needing to deal with the debt ceiling and the looming sequester and house republicans concerned that if they do anything on tax reform, that they may leave themselves open to the senate not taking action. therefore, they have taken in on popular vote for no reason. >> first of all we have to solve
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this debt crisis in terms of sequestration and in terms of the full faith and credit of the u.s. and. we are not going to accomplish tax reform in the next six weeks. so we have a deadline that cannot basically be moved for what we need to do in the next six weeks. so that would leave adequate time to tackle the longer-range problems. we will not publish tax reform in the next six weeks, but we need to essentially deal with the sequester. since we find a balanced approach that is going to raise the trillion dollar surplus to it. that is why i have some optimism. because we need to face up to the next six weeks and solve it
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and then move on. >> [inaudible question] i'd like to ask you about one of the big things involving entitlement reform. how big of a package would you need to see in terms of republicans for you to entertain serious reform. talking about taking the debt ceiling off the table for the next four years. it's not big enough for tax reform? what need to see? what you need from your colleagues on the democratic side to engage in this kind of conversation? >> first of all, we have to take the debt ceiling off the table for a considerable period of time. secondly, regarding entitlement reform, let's take medicare as
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an example. there have been few changes in terms of medicare and its future. number one is that the rate of health care growth has been diminished. and the rate of medicare costs increase has also been diminished. at the first consequence and events of the last three years. suddenly we have health care reform, which i think has accelerated costs increase. what i think we need to do in terms of medicare is for both parties and the white house to have a serious discussion about how to get hold of medicare and medicaid costs. we really need to do that.
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but social security we have to have the same kind of discussion so i urge the chairman of finance, the ranking member in the senate, myself and the white house sit down and look at medicare and look at health care reform, look at the reduction in the increase and see how we intensify that. i was among those who really urged health care reform that we put into it instrumentalities to change from a fee-for-service system. i went through this with my own family. fee-for-service is not a feasible structure for the present or future. we have the instrumentalities to exchange it for a different
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system. does that answer your question? >> we would like to be part of the fissile talks over sequestration and continuing resolution. these are part of the crisis is that we are facing the next several weeks. our own judgment that is that we need to face up to sequestration. we need to find a balanced way to do it and then go on to tax reform and entitlement reform. >> the president taken on legal merits? that there is no way the treasury can, you know, effectively prevent the consequences of breaching the debt ceiling if it's not raised? >> no. two well, it gets back to the
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first question about where we are. to my comments about the change in republican ranks, really think the president had no choice but to essentially say to the republican party, you should not dabble with the debt ceiling. it is something that would have such serious consequences, and i don't want to essentially see if i can find ways around it. those ways are very problematical. essentially what we have tos ary problematical. essentially what we have to do is face up to the need to address sequestration and then move on. i don't want to be used as a weapon the debt ceiling. because it is not a weapon
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against me. it is a weapon against the full faith and credit of the united states and therefore, it is a weapon against the citizens of this economy and the global economy. and i think we need to be straight up and say that essentially what i will do is look for ways around it. the republican caucus has said from the beginning and dramatically change since i joined the ways and means committee. the republican party really has to decide just how much it's going to gamble with the economy of the united states. i think that would be a dangerous scandal and i think the president has stressed that we have sensed it out. so i'm with him on that.
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>> we are going next to finlay lewis. >> i'm not surprised. >> assuming that there is a negotiation that does resolve a fairly comprehensive deal between the european union and its, and taking a look at the issues, that's going to have a profound impact on the regulatory regime in this country and in the united states. going into that, what would be your reservation about the deal that would emerge? what would you be most concerned about? >> well, there is a meeting of a group that is looking at this.
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and in my position, should undertake serious discussions between the united states and the european union. at the same time, i think that we need to be realistic. i was at delhi over 10 years ago. i think that there were unnecessarily optimistic views about how quickly it could be done and how uncomplicated it was. it turned out that caution was the better part of judgment. the eu has immense regulatory issues, and i think that they would have to be willing to essentially open up the markets and not use various procedures to try to safeguard the market.
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so i favor proceeding, but with an understanding that there are immense issues to be looked at. and it's not going to happen very quickly. but i am in favor of starting it. >> talking about nontariff trade, it is fancy language for regulations. whether we will allow european beef that could be contaminated with mad cow disease. inevitably out of that, there will come a reconfiguration of the safety net of the regulatory safety net on both sides. is that a troubling prospect
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you? dc some opportunities to streamline the way the two economies govern themselves? >> we have dealt with the issues with safeguarding other countries. we did that in the negotiations with colombia. we did that in negotiations with panama. if any two entities can resolve those issues, it is the eu and the united states. essentially, what the eu has been doing, in my judgment, to use regulatory provisions. i don't like the word protect exactly because it's overused, but to essentially safeguard the market from our competition. so we should be able to do that
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than to structure should be able to meet those tests. that i think is very doable. the french have to be willing to let us enter into their market. and we have had the same problem with russia, and i think that we have basically taken the step to resolve it. do it with russia, we can do it with the eu. >> you talk about the republican party changing. when the democrats were the majority, they had blue dog democrats from south carolina and mississippi and louisiana and north carolina and virginia. they are gone. the democrats have changed. the democrats are far more uniformly liberal is a party than they were when you were the
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majority party, certainly when it came to the house. even most recently. is it all one side that changes? >> no, i looked over the ways and means when i entered in the next two years. i did that yesterday. that will give us a change in both democrats and republicans. i regret what has happened. i think that redistricting has very much diminished competition. in the '90s i was in a marginal seat and had four contested elections. we were talking yesterday about some of the advertisements that we ran in those contested elections. i think we need more of them. let me be very clear about what
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my feeling is. there has been some change in the democratic ranks. compared to the republican ranks, i think there has been considerably less change. i regret that there aren't more food also than our brains. but i think the main obstacle to solving the debt ceiling crisis are the tensions within the republican conference and to some extent, in the senate and the republican side. speak about the radicalization of things.
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.. as i look about, i think her and her of the mainstream of the democratic party and basically that mainstream -- look, we are willing to sit down and talk about further budget cuts. our insistence is there has to be a revenue and a major tax ingredient. the american people basically agree with that, mark.
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the american people says there has to be balance. the american people basically said in terms of inequality in this country that we were out of kilter. all disclosed that the spirit urge everybody to look at what type into the internal rift in this country in the last 30 years. i represent the district is basically the collar or did not change it because every district and, so now there's a higher income ingredient. i represent mostly cong county, reagan democrat as it was called territory, maybe the first. and if you talk to people within macomb county, what they essentially will say this for the last 10, 15, 20 years, the
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middle class of this country has essentially been trading under. while there's been a tipping of the balance in favor of higher higher income groups and they would agree with the cbo said that that tipping has not been promotional of economic growth. so i think we remain on the democratic side through the ranks have somewhat changed within the mainstream of this country. well i think the republican conference is out of step. i think it's gone too far from the ranks of the ways and means republicans when i first join that community. >> we are going next to john mckenna, michael warner, jennifer depaul, paige cunningham, stephen cooper and robert sausage or two and.
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>> can you talk more about tax reform and entitlement reform, how you see the process unfolding, are those two things going to the link? do you have a target in mind for the deficit reduction that might be involved? just about how the process works. >> in terms of deficit reduction, have indicated that i think is a reasonable target. i think what we essentially have to do is to move the ratio closer to 73% and it is today and we can have an argument as to how much below that we need. i think this sequence is very clear that may say so and this is the republican party needs to ask that. we need to do with the sequestered the balance between cut revenues. we then need to have a serious
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discussion about medicare. i know there's been some discussion about moving the age. i have several questions about that. i do think health care reform is here to say. the republican party needs to accept that. we've had, as i said, this diminution in the crease caused to medicare and other health care costs. we need to sit down and discuss the last three years a trend and how do we build into it a change from how we reimburse health care. in this sense, i'm kind of a radical. i really believe we need to move away from fee-for-service to a
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different structure. there were differences within the democratic ranks. i was in favor of building and instrumentalities that help us move in that direction. we now have some further grant to accountable care organizations. there are other mechanisms. fha serious discussion on a bipartisan basis about what was endeavored. it's not likely to be triggered because of the reduced increase in costs. so that's how i would handle medicare. social security is not an immediate threat in terms of our imbalance. i think we should sit down and have a discussion about how we safeguard and fortify social security for the longer-term. let me just finish quickly by talking about tax reform.
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dave camp sets out a target in the 25% rate for individual and a 25% rate for corporate taxation. i said i didn't think to setting that without indicating how you would get their was anything realistic. you haven't asked me how were going to get our revenues for sequestration. and i judge not, we're going to have to take a look at proposals like the 28% proposal at the administration. but with this caveat. i think i was among the first if not the first to say be careful about how you perceive it with itemized deductions. and so, we asked joint tax to give us chert on income distribution for each of them.
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and the income distribution changes depending what itemized deductions are taken into account. but clearly, if were going to find additional revenues, including taxes, we're going to have to look at itemized deductions, but in a careful way. or also going to have to look at loopholes. i think a number of you know that a few years ago i suggested we looked at carried interests. i knew not in about it until a law school classmate of mine said lisa go told her he had been involved in the use of it and what was legal, he thought it was abusive. so i looked into it. i think it's part of tax reform we should look at it. and other loopholes. by the way, you're doing that in
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europe now. >> i don't know about everybody else, but even though we've been through this they still have this type to initiate and i'm wondering if you can tell me what would happen if congress did not raise the debt ceiling. that would make it such a dangerous option for going forward. >> i think our credit rating would go down. and how would we pay the bills? how would we pay social security points how will we pay veterans? [inaudible] >> the republicans are saying pick and choose. and so, let's have a vote here, which ones would repair it? which one would not occur right away? i mean, the president was right to say, in my judgment, to the republicans, don't do it.
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you are playing with fire. >> wife? i don't understand i guess. why are they playing with fire? what would happen? >> those are two different questions. the republicans have some idea what would happen. we've been through this with the credit rating and i think essentially they would know what would have been instead they say let's pick and choose. by the way, they haven't said which they would pick and which would be left aside. the president made clear, we are not talking about future expenses spared were talking about paying for what the congress has voted. pick and choose this something that is that this point theoretical, but would become very real without spelling out
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which ones would be left aside. you're not going to pay soldiers? s-sierra not going to send out social security checks? do not going to pay defense contractors? bus was involved here. >> one more that i've got to go another person. >> democrats as dangerous. is it to the republican strategic advantage to get to that point and get as much as they can out of your party? >> no, because i don't think that is a weapon that will move us. >> so it's not that dangerous -- >> no, it is deemed dangerous. it is very dangerous. it is so dangerous that this country should not play with it and the president essentially says, i don't want to be leveraged that way because you're essentially leveraging
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this country. not me, but this country. >> republicans in the wyoming legislature want to use the unemployment reform in the payroll tax cut bill from last year so they can drug test unemployed people. the labor department has been issued guidelines, that they will presumably do the same thing. what do you think about? >> the only two provisions that we argued about in the conference committee, right, it only makes appropriate if you can drug test somebody who was let go of allegedly because of drugs or is applying for a position that traditionally has had a chart test. that's what's in the bill. so the notion that in terms of the federal unemployment system that you can use drug testing
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beyond it is not consistent with the law. they can't do it. >> the labor department is trying to figure out right now. it will be relatively few, not a majority? >> the notion that it was a maturity was a figment of some of his imagination. there is no evidence that most people who would be covered by a, that that would reach a majority. his two provisions. its two aspects against someone who was fired because of it allegedly or someone who is applying for a job, which traditionally has struck testing. that's a small minority of the cases. ibi mac
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>> davol expressed concerns with letters to you and your colleagues regarding as you talk about sequestration, shifting the burden from federal government to state and federal and infrastructure. can you reassure state and local groups that interest for tax exemption is up to table, or is that still -- i know you've been a proponent of build america bonds and want to see that come that. i also wanted to get clarification. you are confident that we'll see tax reform have been after sequestration? >> on the ladder, i am not very confident. i am hopeful. secondly, in terms of 28%, and that's why we need to have a serious discussion. the administration's proposal had itemized and non-itemized deductions as you know. there was that much attention
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paid to that. the state and local bonds is probably the largest part of the non-itemized deductions. i have some concern about that and we need to talk about its implication. but it's not so simple because there's some analysis that paved the way of works essentially the main beneficiaries become the very wealthy and i think we need to look at that. in terms of state and local taxes, we also need to look at that. i'm not in favor of just accepting the administration's 20% proposal lock stock and barrel by someone who urged caution a year and a half ago, i continue to do so. but i just want to be emphatic. there is no way to meet the requirements of sequestration without violence.
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there have to be more revenues than they're also have to be budget cut. let me remind everybody the speaker talked about $1 billion in revenues when he met with the president. we have not reached that. so when i read editorials saying that i among others are talking about our revenue and my taxes, that's very true. and by the way, what was the proposition of the republicans when it came to revenues? it was itemized deductions, ray? so why would they be totally resistant? do was governor romney's suggestion, right? he said just pick a level. but that's what he was talking about. so as part of sequestration discussions, we need to discuss further work on itemized and non-itemized deductions.
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one last point i know we need to move on. i was emphatic about this in discussions about the administration. we needed to include in the tax provision they reinstitution of peace and pep band that's been done at the 250,000, 300,000 level. so we are to have built-in some use of itemized deductions. we need to look at it further. >> back to the issue of medicaid reform. he said utah's red theseus inevitably from fee-for-service models, but when i ask republicans, it seems as though they're skeptical. they say we need to have more immediate coyotes. so can you be more specific about where you might find common ground with republicans?
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you mention recent tiedemann age. what about rebates for dual eligible, either idiocy to could agree on. >> let's take each of those. i mentioned my concern about age. i think we need to have a very serious discussion about it and how it would help -- how would fit in how preform number one. number two, as two other suggestions, we can look at your agree bates. but is at stake is over $100 billion in terms of dual eligible as an others you know. i think we made to look at it. let me just be clear about this. we've had a reduction in the
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escalation of health care cost and medicare less than a 1% increase. we need to sit down and seriously and ask why that's happening. hhs says in good part is because of health care reform and i think that's part of it. but i'd like to engage all of my colleagues and how we accelerate the move from fee-for-service, which i think in the long-term is going to be how we basket hold of health care costs. i don't know your experience and i won't dwell on it except to say in my experience with fee-for-service intern says that health care for my beloved late wife was absolutely inscrutable. it was not understandable.
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it was an efficient. we received those from people whom i don't remember ever meeting. it is a system that is based too much on volume that we need to move away from that and i think we go into health care reform, some instrumentalities i want us to do more. [inaudible] >> we are ready to consider roe means testing. when people say let's do means testing, we do it for part e. as you know. we do for prescription drugs. should we do more of it? i think we should look at it. but let's remember, we don't want to move it up to a point where people drop out. we need to look at that.
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>> part of the jargon and dcs tax reforms brought a slow return rates. the poster this over and over. so the idea of tax reform should be revenue neutral, is that off the table? >> i don't know, but we need to move away from the writer eric. i mean, i sent this at the beginning. 25% top rate and not dave camp has suggested that needs to be reevaluated. i never thought there's any reality to it because no one ever said how you would get there. we now have raised their rates. we have to some extent addressed itemize deductions. i think we need to go into further discussion on that.
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so i favor tackling tax reform and getting away from this notion that essentially what were going to do is lower the rates and broaden the base. it's too rhetorical. >> how realistic do you get is the president will stick as i'm not going to discuss or negotiate the debt ceiling stands as we approach them in february or march deadline? and if he does, is there a danger that he doesn't give republicans to walkout from the precipice of a walk-up and beat their chests on? >> you know, i don't think it's a matter of saving face really. i think again the president was
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right to be blunt and i think what will happen is the republicans eventually will decide on one of two courses. number one, to plunge a the cliff in terms of debt ceiling were to sit down with the president and discuss a balanced approach. there are only two alternatives here. >> the president said he's not going going to discuss it. >> he said he didn't want to discuss the debt ceiling. he said he wanted to discuss what it would take to avoid sequestration. >> i wanted to change the subject. i wanted to change the subject to gun control.
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you are here when the assault weapons ban passed. i'm curious if this deep divide between republicans and democrats coming to think that that is a possibility? any common ground piece of legislation in the ipo to get through. >> now, i think it is realistic. you know, i think the ground is shifting. i think the ground shifted when it came to how we deal with the deficit in this country. i think when senator mcconnell said the allied trade essentially voted for the status quo he was wrong. i think the reelection of the president shifted the ground when it came to how we proceed with economic growth, how we address the role of the middle
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class, how we address those that are trying to climb up the ladder to the class. i also think the ground shifted on gun control, including the ground on which the president stands. i think everybody should be honest. i think a lot of people have shied away from gun control because they thought it was politically difficult. i've been a strong advocate of it. maybe because it's been easier, though i represent a district for which it isn't totally easy. but i think essentially what happened in connecticut was a shifting of the ground under
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which everybody stands and it may well be that as a result they lock shaft and it may be because the repolarization has increased in this country, that there are lots of people who think that politically they can't move. but the country as a whole i think i shifted. and the president has shifted, to some extent. i think he acknowledges that. so what's realistic? today i guess i must as we sit here will be a presentation. i think that we will pass some major provisions they think in terms of magazines. i think we can do that.
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i think in terms of more clear surveillance in terms of who come by, at gun shows will come under regulation. in terms of assault weapons, i think there is at least a 50/50 chance we will act. >> anybody who hasn't had one. yes, ma'am. >> possible loopholes you might include in this tax reform package. what might be in there for energy in terms of targeting oil and gas tax breaks in these types of things. would there be a section in there on that and what would it look like? >> so just quickly you know, is this last question? >> i'll be really quick. oil and gas came within a provision that we pass to
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replace the provision we have for manufacturing in this country because the wto hobbit was violative of the wto. so we tried to replace that and that was also found to be wto violative. so then we pass the present section. at the last minute, oil and gas is placed in there. it has nothing to do with manufacturing. it was done in the wee hours. we were stuck with this, do you want a replacement, which will help manufacture in this country, including oil and gas are you going to vote against the whole diet thing? so he accepted a compromise. it has to be extracted, talking about oil and gas. >> not the last, last question.
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>> we have to ask, right? >> i'm sorry, francine. my ability to see around corners. [inaudible] >> everything you would've run out of the tax reform process has been dealt with the least and i halfstep masher to make it maybe not impossible, but much less likely to tax reform goes forward this year. is that basically what you believe and if you could just say a word about why at this point in time tax reform should go forward. what do you see as the upside to that? >> i am not saying that. what i'm saying is i think we took some steps in the last package that has some ramifications for tax reform.
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but i'm not saying that we should not sit down and talk about how we look at our tax structure and how we reformat. it's affected by what we voted, but it isn't anything close to the whole package. they think what it does is force people to be more concrete about people when they talk about tax reform. the pages give you you an example. some of the provisions we heard on training and retraining. some of them are in appropriations and some are in the tax structure. i think we can take a hard look at all of our training programs. some of them aren't about the
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taxation. we can do that in many respects. so when he says, i think the opposite as they see it as such should have been. i think we should extend if not end the debt ceiling issue. we should just set it aside for a considerable period of time. we should tackle sequestration and we have to do that in the next six weeks. so i'm hopeful that we don't drag this out as some people are saying and then move on to serious discussion of tax reform and entitlement issues. so i see it in a sense the opposite way. i say let it is done, the sequestration part in the debt ceiling in the next six weeks and then move on. those who are you saying let's
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do a triple by drivel, they are the ones who would be undermining the effort to sit down and had a serious discussion of tax reform. >> we have about two minutes left. francine. >> the question itemized reductions. what is your thought of having a cap and itemized deductions that people use for whatever they want. mortgage or a charity or whatever. >> i think the problem with a cat is that it has to seriously consequence, especially for charitable contributions. because a substantial portion of the charitable contributions come from the very wealthy. i think this figure may be something like well over half comes to people with income over a million. it may be more than not.
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so the problem with a cast as they would have, i think significant consequences for charitable contributions and perhaps for state and local taxes. so i think a better way to look at those is to look at the administration's proposal, the to do with caution and if possible to do it on a bipartisan basis. maybe i'll close with a somewhat hopeful about. the notion we should address that issue has some bipartisan roots in the last year, right? everybody's been talking about it that we attribute to sit down and discuss on a bipartisan basis if the republicans are willing to look at additional revenues, including taxation.
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and maybe i close with this. i don't see the alternative. you cannot address sequestration simply through cut because if you reduce the amount for defense to say 100 alien, which some people, including somebody i know quite well says is feasible, but the 500 is sent. so if you reduce it substantially, but have some of that, where's the rest of it going to come from? it have to come in substantial part i think from the domestic side and i think if you look at what's happened and what is
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going to happen if we continue on this path to health research, nih, and i say this in a personal way because of family involvement in health research. when my wife started working, running a peer review group and child development and child health, if there were 100 applications for the peer review group that she ran, they would set aside 50. the staff, my wife, would set aside 50 is not very strong. they would take the other 50 and peer review would come out with 15 or 20 highly ranked. and about 20, maybe half would
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be funded. today, it is lucky if two or three are funded. and what is true for child health and development is true for medical research is true across the board in most areas of nih. we haven't -- this is not a question of starving the east. this is a question of starving, whether we are going to start not the beast, the necessary programs in this country. and we shouldn't starve them. and so, we need to face it the sequestration. we need, in my judgment, to see if we can set a target beyond 1.4 trillion over the next 10 years and we need to do it in a
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balanced way. and if not, we are going to threaten balance in this country, including the full faith united states and the president was in my judgment absolutely correct to essentially throw down the call went and say this must not happen. >> thank you for taking all the time at this. >> my pleasure.
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>> the greatest honor history can bestow is the title of peacemaker. this honor now beckons america, the chance to help lead the world at last out of the valley of turmoil and onto that high ground piece that man has streambeds since the dawn of civilization. >> we must embark on a program that benefits a very specific advances in industrial progress available for the improvement of
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underdeveloped areas. >> the brookings institution hosted a daylong forum on improving the u.s. economy. the first and a focus on manufacturing sector. includes the mayor of louisville kentucky, greg fischer and klaus kleinfeld. >> i am strobe talbott. it's my pleasure to welcome you to the brookings institution on a soggy day that's not too hard to come in from outside on a day like this. this is the fifth growth
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innovation foreign that we apology or at brookings. i give you background in a minute. is the third we are conducting publicly. the phrase growth renovation is an important part of vocabulary or canes. we happily call for for its additional which we try to cluster all of the work that are more than 100 scholars do here. those four priorities are energy and climate, opportunity and well-being, managing global change and growth renovation. this is, i think, exactly the right balmy to be having today's event. we are in a period of transition international leadership here in the capital of course. we have a new treasury secretary, new chief of staff coming and it will be having a new commerce secretary, labor secretary and of course the
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113th congress is settling in on capitol hill. the forum is going to address the issues of how to reinvigorate our economy, how to strengthen competitiveness and how to create jobs. were going to have three panels. the first advancing industry manufactured. the second on deficit reform in the third on improving government performance. the participants here today include brookings scholars outside experts and private sector representatives and leaders. our discussions will reflect a lot of research that goes on here at or canes and you'll be able to find a number of examples of research outside the auditorium where you came in. i recommend in particular the work of our metropolitan programs on ideas and how to revitalize manufacturing and also the work of our government studies program on how to make
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innovation-based economy. the growth renovation project is an example of overdoing increasingly have put games and that is undertaking both research at public events and outrage that draws from multiple programs, research programs here at the institution. we have three of our research programs represented today. the growth renovation project has led inside of her canes by darrell west of our government studies program, bruce katz of our metropolitan program and martin daly of our economic studies program. the cochairs of gti, growth renovation bursary brookings trustees. glenn hutchins, sub to and to train five. a final note before turning the program to client is to do something quite different than it did for many years to show
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his face and innovation. i used to always send my remarks by saying, will everybody please turn off your cell phones. i would ask you to turn them onto silent. you can keep them on on the condition use of only two tweet out of this conference. for those of you able to do that, i'm not yet one of them, the hash tag is u.s. innovation. so glad i'm you know about. so. talk to these folks. >> i'm sure in a widespread disobedience showed do with your technology what you choose to know someone in the technology business, please go ahead because that could make money when talking. thank you strobe for having me here today, welcoming us to the
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brookings innovation. this guide a stellar panel, sockets are my remarks quickly because i know you can't do your job, not me. i did watch reflect our first panel was over three years ago. at a time where in the depths of the great recession, the unemployment rate is 10%. the last 8.5 million jobs. pausing to remember that. a lot of face had a moment of great national crisis. brookings i think thunderstorms great leadership choose to the two is the future. how do you grapple with today's problems in order to create a brighter future? one of the things they did a search or heard of witness today, the growth renovation program. we have policies to unleash private sectors. we weren't under illusions that government creates jobs are
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innovation, they can create conditions under which those can be fostered. and because we beat the need for growth on the heels of the great recession is a vital american problem, the huge loss of economic reduction we operate about $1 trillion for the our potential. unacceptably high unemployment rate representing vast source of human potential. many people ask why this grows important important that we focus on washington centric in it's kind of a not problem. people don't understand the vital difference of compounding of interest over the course of a very long time. of economic growth. 1% difference, two to 3% represents a massive, massive outcome difference over time. a few examples for you. if for instance between. from the civil war to 1990, the u.s. economy had grown one
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percentage point less. or condi would've been the same size in 1890 as that of mexico. that 1% difference over the century created massive outcome difference. looking forward 10 years to now figure 2% rather than 3% potential, will have additional 1 trillion loss of outcome, but $10,000 per household in this economy. it's a very, very big deal. growth was also not import. it's also growth that is inclusive that is broadly shared and that's one of the things brookings is devoted to. put up a project centered on that issue. if over the course of the last 30 years, roughly 35 years, the average income in the united states household, .6% actual versus 2% for the economy, the per capita gdp would be 50%
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higher. $90,000 versus $60,000. if you translate that into it happens, that is vital in what we do in washington is really, really important. i just came back from a trip from brazil. i don't want to spend a lot of time, presoak this country is your% growth rate. a lot of that has to do two things have experienced from washington had been imposed in brazil in an economy less resilient than ours. fiscal uncertainty from a slightly higher taxes, more regulation, cost of labor and all that is caused the economy to go from economic 20% growth rate. we have an ability to stand more in the united states and they do, but it's the same effect. government can't create economic growth, they can create conditions under which the economy grows with the burden under which an economy struggles and that's vitally important. so today, you look where we are
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and you can see the economy has been in recovery. household net worth is almost prerecession level. the economy almost prerecession level. we've added 4.5 million jobs. that still means we afford to get back to prerecession novels. an implant rate is 7.8%, but enough. housing sectors recover economic growth. when the process of a slow, steady recovery. the problem is about 2% is not enough to reduce unemployment measurably from here and getting about 2% is absolutely vital. we are very, very hopeful we can do that because for creating conditions right now to increase economic growth in the private sector. today, however, the big problem is the political failure in this town associated with the inability to solve our debt problems of our government debt is not a problem, trajectory
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leads us to the course of a not that long time period, a decade to levels that will further imperil economic growth. because the level of debt project did based on today's operating of the government. history shows those countries that have experienced level of debt grow another 1% less than it would have otherwise. so you can see where i'm the cost of having an economy to contribute the above 2% growth necessary to generate reductions in unemployment. on the cusp of having a debt problem that can take that away and get us back to the sub 2% growth that will cause unemployment to be sticky for a long period of time. it is a very big problem. and that doesn't include the damage of consumer confidence, the decisions taken as a result of employment and consumer capital spending in all those things that layer on top of that. so that is a very, very big
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problem that we will next turn to focus on growth of innovation in coming years. but as soon after the panel, one of the things that bruce katz has taught me is all national governments can build up deficits and wallow in dysfunction, states and cities cannot and the hope and brandeis said the laboratories of the nation, the hope that we have for important parts of our future is at local level continue to soldier on and do it's necessary where the rubber meets service to create conditions for economic growth, kind of innovation projects that advanced manufacturing date to medium incomes have been generate the growth which is shared and inclusive. so we've got a great panel managed by bruce katz. the title is proven strategies for bolstering advanced industries. bruce, all yours.
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take it away. [applause] >> good morning, everyone in thank you all for coming out on a rainy day in a live driver when watching on the webcast and ultimately c-span. i'm bruce katz, vice president of the brookings institution, the metropolitan policy program. i want to reiterate streb's reminder to tweet under u.s. innovation and i want to thank glenn for the support and the intellectual guidance for
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renovation over the years. for those of you who have not picked up the three metropolitan policy program's papers and advanced manufacturing or link to them on the web, please do so and we will describe those as we go forward with this panel. let me start by quickly introducing the panel, then i'll set some context and looking into the conversation. to my immediately left, klaus kleinfeld, ceo about power, while much everyone in this room. also a trustee of the brookings institution. dominic barton, global managing director of mckinsey, also a trustee of the brookings institution and someone that we been partnering with at the metropolitan program i'm moving advance industry initiatives in colorado and tennessee. emily turow co. -- emily derocco run skills training and work for
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us. prior to that was that the manufacturing institute. prior to the sheep a senior role in the department of labor. finally, the mayor of the great city of louisville, greg fischer who is the background in manufacturing, but for interestingly upon taking office has been working with the mayor of lexington, kentucky on a dual match or welfare come a regional effort on it as manufacturing. but major set some context for the papers we put out yesterday and for the conversation today. first, a very quick reality check. we still think about manufacturing in the united states as yesterday's economy as opposed to the vanguard of innovation in our economy. 9% of the jobs, 11% of gdp, 35% of our engineers, 68% of private-sector r&d, 90% of our
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patterns. we may be the only mature economy to somehow decouple production and innovation. trust me, germans are doing it, japanese or not contain these are not. some bad news. quinn talked about the great recession, a loss of 8.5 million jobs. manufacturing was the loss. 2.3 million manufacturing jobs lost during the recession. more than construction, more than business and professional services, more than trade and transportation. think about the great recession, finance sector, manufacturing took the brunt of it. in the last decade, we lost 6 million manufacturing jobs in the united states. once you lose those jobs come and trust me, engineering, product development, technology skills, they leave the country. third point is some good news.
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since the end of the recession come in manufacturing has gained back 526,000 jobs. not enough to make up the loss, but significant change. there are trends out there right now, there is a wages in china, showed us revolution, beginning of reassuring the production facilities, disruptive technology, 3-d imaging, digital fabrication that gives us a sense this is not a blip, but the beginning of something big. so here's the question we have for ourselves and for the country. these are essentially the topics in yesterdays paper that will be the topic of some of our conversation today. how do we begin to drive collaboration between our major companies, universities, specialized firms so we can crack the code on product and process innovation as they do in germany. so we've recommended a series of
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advanced innovation hubs, not eric's and save. though they on the department of commerce. how do we build a supply of workers? yesterday we recommended a race to the shop. member race to the top? icefield shop, but i know there's people out there who've made rings. how do we have a race to the shop so we can have skilled workers their distinctive manufacturing clusters, whether it's automotive and louisville in detroit, heiress dave in wichita and seattle and portland and san jose. last piece. how do we grow supply of the ants engineers in the night stays by creating a network of manufacturing universities. we do not land-grant in the 1860s. this is the challenge of this generation, the century, in this
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area. that's their final recommendation. so we can get our act together in this country and from our perspective at the matcher programs we feel this energy bubbling up. we can realize the full potential of the advanced manufacturing moment, but we need to make bats. we need to have smart public policy is, whether in this town or in the laboratories of democracy defenders of innovations in metropolitan areas. let me start with the clouds. to be the movement? >> i absolutely do think to the effect we are sitting here debating it and the whole site to give us his full saying and it could because it's changing. let's get a lay of the land because you mentioned things and
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i'd like to add a few fair. 500,000 at the start of the recession is good. secondly, basically to see the automotive industry is a large player. who would've thought after the debacle in 2008, 2009 projection for this year is most likely going to go back to prerecession novels. it's a strong engine for growth and finally it's become innovative. and the second point, why is that? there's a big change because some smart government regulation. we see directly affect game corporate average fuel efficient date that basically means finally we've decided to see the cars we have here have to obey certain efficiency rules. that drives a whole host of renovation. so that's the new foundation. start innovation. in addition to the new
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foundation, you mentioned a big one, for the u.s. has been given some gift i would say, it is so big as so many implications that are just starting to understand what that means because we are seeing it already happening today the decoupling between natural gas and oil. reduce to be highly coupled is cheap and it's going to be cheap for a long time if we don't screw it up, which i don't think we will. so this is a fantastic opportunity for many manufacturing industries out of the three examples directly out of the co-author area. we currently put -- automotive expansion of the interesting thing is variety thinking about days to come for capacity is sold out. we are building another part of expansion of capacity for not
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highly developed for the aerospace industry and putting that into lafayette. aerospace, by the way, another fantastic industry, with u.s. continues to have a very strong position and is a nice market and manufacture implications in that in a place of use to treat has the same plan, which is down in texas is a big refinery. the only refinery in the u.s. because costs in the u.s. were outrageously high. this is now one of the lowest class in refineries. so you bring it back to play a full role. so that's all the good things happening. but what is the risk or opportunity? if you look at the numbers come in the next year until 2018, 227 and million manufacturing jobs or retire. so i see it as an opportunity. you have a lot of people with
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experience within the workforce. at the same time with 300,000 jobs open in the manufacturing space in the u.s. alone. another question is what is the niche of going to look like? pretty much every 30 projects and i would agree that 40% and even more of those jobs in manufacturing will require a postsecondary education. ..
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the corporation. i think that is one of the most natural -- corpg it's happening already. we have a number of programs underway successfully. because you suffer from a lack of people if you don't take it in to your own hands. >> that's a big challenge and it's a a challenge that most people today go to an education system don't understand what a manufacturing job looks like. the image they have on the manufacturing job is that you come in early in the mortgage with a white shirt and leave in the evening with a dirty shirt. right. and so that's so far from the reality. and -- [inaudible] dirty. so that's so far from the reality today. that we got to make manufacturing sexy again. i think it starts with bringing people in to our plans making having them look at what is going on. how high teak they are. so young people -- a couple of things what we're doing. >> the first round. >> well, one quick thing.
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i detect a slight german accented here. [laughter] >> just two seconds on the german model of apprenticeship, if you can and move on. >> the general model of apprenticeship, well, the model goes like this. you basically it's totally accepted for as long as i can think that a manufacturing job has a high society. i think that's what it starts with. all right. and the education vocation and the trainers are seen with an equally strong social respect. -- instead of going to twelve to
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nine after ninth grade, and then go in too a vocational training job. the way it works is basically start working, you work most of the time, i mean, during the year and then you have courses at the vocational school. they are extremely practically related to the job that you get educated in. then you have a nationally recognized test. so if you pass the test, you know, no matter where you want to go, you have a degree. all right. this degree is i would say very, very highly regarded. the big advantage it has, and i've seen in families and friends i don't know how it is with your kids, you know. there are kids obviously -- excluded that don't have that much of a temptation to learn math. and particularly when they get to the age of 13 to 15 or so.
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because suddenly -- they have other interests and math is no the the most attractive thing to learn in the afternoon. the dynamic change and they regret it later in life. the dynamic change tremendously when you tell the kid you got the junk yard you gave to the kid and said do whatever you want. repair it and you can pick up some good looking girls it to scare tune the motor you need to know how to turn learn the computer. you have to learn how to wire certain things. you need to understand the function and that's where math suddenly comes in. i tell you, the kid is going to learn that math. it means something very different.
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the individual if you would have taught that in a classroom environment adjust a discussion on -- [inaudible] that's very important dynamic there. >> game changer, shell gas, more regulation, barrier, culture. i want to talk about the here mowns. [laughter] mcken city is about the cutting age looking at not only global manufacturing trends but trends you're describing advanced industry. and innovation. how do you see it? >> i think very much is said at the beginning of the context claus. there's a shift doing on. i think we should start by saying too many of us lump manufacturing in to one big category. i think there are at least five categories. i won't bore with them. i think the tip is the advanced manufacturing which is more using big data. it's advanced material.
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it's nano technology. it's the combination of many of the things the innovation capabilities that this country is good at the cross functional capability. as you said, it's -- it's roughly around 11 to 12% of gdp. it's extremely important fly wheel. it accounts, football we think, a third of the u.s. productivity growth. that 12% of gdp is accounting far third of the productivity. if you go back to what glenn said in the beginning this the difference of 1% shift it's a big deal for us to get right. the other thing i would say is that this advanced manufacturing sector is actually doing quite well and obviously doing well before the great recession. 2.6% growth. it is continued to do that inspite of all the challenges and changes that is going on. we think it's an opportunity for it to grow in a more significant
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way. and this is where, you know, doing actually work with brookings, the work being done with tennessee, work being done in the cities and colorado sort of space program. the areas where i think question really advance advanced industries is by doing some of the things that the country does very well. if you look at the silicon valley, you look at what is happening in austin and texas. and came bridge. everyone else in the world tries to replicate -- it's very difficult to do. i can reel off a lot of -- russia is trying to do it. china is trying to do it. there's something that we have i don't know i think it's in the air. it's a collaboration. if you look at what is happening in colorado with the. 0 company naps are not all in one sector. they are multiple sectors. health care companies can learn a lot from state manufacturing companies. the video technology that is
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being used. the interfaces that is done in the space program is very applicable to, if you're a young doctor doing diagnostic and so forth. you wantble to together. and the role government plays. especially state and mayors, i think play a really important role in getting the clusters together. and i think what we see here potential and last thing i just say there's momentum we lost a lot of jobs. we lost a lot of jobs in to the broad sector of manufacturing. overseas we are seeing more reshoring. tr a -- i can bore you with a long list of companies that have been coming back to the u.s. particularly on that. just to raddle a a few ge with e geosprings water heart. nissan for the first time is disoik one of the luxury vehicles, the infinity suv in
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tennessee. apple actually bringing some of the mac productions line back here. emson is bringing a lot back from asia to mexico and part of it is at shale gas also. labor cost is only about 3 to 4% of the cost. right. when you talk about energy cost coming down the way they have in the last six years, natural gas prices have dropped by 67%. that's a far bigger driver. and by the way, -- we have some mom bmw. electrolucks. a cooking center. there's a hell of a lot of energy cooking that actually goes on, again, with data, the various different materials. >> you're not talking about my house. [laughter] >> yeah. even whamo.
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the guy that makes frisbee and hula hoop. there's more technology, believe it not, going in to play eye teems and so forth. there's actually a lot going on. i think what we need to do is take a competitive advantage we have around collaboration and scale and i think that's going to create more business opportunities and is going create the productivity effect fly wheel effect that we can . >> it strikes me what you're describing is an economy we don't quite understand. i was looking at two statistics yesterday. silicon valley san jose. 9 percent of americans are employed in manufacturing. 17% in san jose. we tend think of facebook and social media, big manufacturing power house. then you look at portland. i don't know what people think of port land oregon. it's a sustainable metropolis of the world.
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20% of the product is in production compared to 12% of the country. it sounds like we don't understand our own economy. >> building a bit off what claus was saying making manufacturing sexy. machinists, we should be celebrating the hell out of our machinists union 110,000. i worry about the aijt of that -- aging of that. you think of what is being done in aerospace and the capability and the training we need. this is -- these are super stars. right. you think of machinists as -- i love your white shirt. these people are highly skilled, the technology. the other thing ag food which is a big industry. if you go to brazil right now and look at farming going on. they are using drones because the farms so big. there's no roads. you have -- so that's a big export source for what we do. so every -- industry needs this
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advanced manufacturing. i think we have to somehow get it to students to see this that this is a very press pretentious role to be played and a lot of opportunity. and we have a lot of -- a lot requires robotics. because let's face it, we have reaching -- when we go to the aerospace we're number one when it comes to aerospace and manufacturing. we're reaching levels of precision that impossible to reach through manual work. you need, i mean, you need finest technology and best computers to do it. that's what the machinists do. that's a big advantage and fewer skills and they are different skills. >> emily, how do you think about the culture barriers, the continued sigma and big numbers that class is putting out there
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about the kind of skill and work force we need build? we could rattle off numbers hold up do we overcome this? >> well, it just warms my heart. [inaudible] and spent the most last part of my career helping to find i think things that work not only for our manufacturing employers, but for workers that are very in tune to the skills needed in the manufacturing economy. i would venture to say in agreement with both our prior panelists that it is manufacturing that we don't understand today. that does require a cultural shift. but in terms of our education and work force system approach to supporting the growth and sustainability of manufacturing in the u.s., we actually do know what works, and we're just not
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doing everywhere and in all cases. there isn't a manufacturing discussion that occurs in this country or, i think, globally where the development doesn't become a huge priority issue for all of us to address. and i'm pleased about this. quite frankly with the u.s. falling behind in the educational attainment, and in its understanding of and promotion of what you and i might call vocational education, nowhere is reform needed more than in support of our u.s. manufacturing capacity. so first, i do want to say kudos to brookings for the race to the shop. it points to many of the shortcomings that we need address even if there is not such a race. but the cultural and image issues that claus raised, i
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guess we have to say we need to change the shop title now because manufacturing is so very, very different today. but thank you for that paper. so what do we know about what works? i think in large measure, these points are represented on the panel today. number one, we know that our focus in developing and educating skills work force for manufacturers needs to be within the regional economy. not against political jurisdictions where all of our policy systems and investments from the federal government now reside. it is in the regionalically economies where clusters are developing and manufacturing can become the anchor or is now the anchor where we can really stablize and grow the current industry. i think even more importantly create the talent asset that in many instances it's the number ones a asset to attract new and
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wringing jobs back and/or moving from new technology and innovation to production capacity within regional economies. so we make federalism around the policy and investment in work force developments absolutely critical. to supporting our regional economy that will be the anchors of our manufacturing growth. number two, and i'm just going to say these in a different way. because these two gentleman actually touched some important points. we need much better defining information about the job occupation and skills and manufacturing today. it's just a traf industry. quite frankly what we work with in the national d.a. bases related to occupation and skills many of the careers in advanced manufacturing today aren't in there. they're not -- they become service jobs in national data bases. the direct policies in
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investment. and we just can't rely on forgive me, statistics, retrospective data about what kinds of jobs and careers are in manufacturing today. we need the power of that national data base, but fueled by the transaction sanctional real time data comes from organizations like manpower, for example up. coupled again with industry driven input to the kinds of jobs and skill competency requiremented being created and needed today in to the future of manufacturing. this is a big d.a. task -- data task that can impact our success in education. >> it's money ball for manufacturing. >> exactly. [laughter] we just had that conversation yesterday. as we gain better knowledge about the jobs and careers, we need -- i hesitate to use this word.
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young people today still look to their parents as their major influencers in what educational pathway and careers they're going to pursue. and our parents today don't have a clue about the opportunities in manufacturing. most say we don't manufacture anything anymore. they will not define the very excited field of robotics and the high end machining and applications joining welding as others do. the materials joining -- they won't define the jobs in to a young person's future. neither will educators. so informational campaign based on real jobs and career opportunity with real payout. manufacturing continues to be the highest pay wage benefit combined industry broadly nationally than any other sector. the other big ticket item, which we have successfully implemented in manufacturing, but not completely, not comprehensively in the u.s.
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we're at the front end of this. it is applicable in our education and work force development reform efforts, quite frankly in other sectors as well, really gets to addressing your question to talk about the gearman apprenticeship. we can't replicate nor shall we replicate exactly in the u.s. with e need to do is end false dichotomy that the investments have created between educational pathway and work force development. that's absolutely bizarre. we can and built educational pathway through second care and post secondary education that allows for alternative -- graduation and the pursuit of post secondary skills development and credentials that in fact relate to over 60 percent of the job in our economy that require post secondary education.
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not necessarily a baccalaureate or graduate degree. in manufacturing while with the institute, we developed a system of nationally affordable industry recognized credential in machining, welding, manufacturing and logistic processes built on the foundation and economic foundation of applied math and reading. translated to the credentials which could and the curriculum which could in fact integrate in to secondary and community college programs and studies. leading to stackable credentials with real labor market value, along the way to an associated baccalaureate degree and as a feeder system to our engineering technology and engineering graduates. progressive companies -- support
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the integration in to the community colleges within the footprint. moving to the pipeline of skilled workers they would need today and in to the future. when i left the institute, we issue active in 36 states, that's in a four-year period. it shows you can we reform the education system by integrated from the needs of the employers. then very quickly, the other things we know the work that we need more desperately in manufacturing is more business - driven partnership with higher education. we need the clinical experience opportunities you get in health care as part of your learning in manufacturing and internships are important part of this. we actually illustrated this in the right skills now initiative around the machine i guess in minneapolis area. you can get to an integrated curriculum. workers with credentials that are valued by the manufacturers. coupled with the paid internship
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which is helpful to working learners today. and ultimately direct connection to the employment opportunity. we've done all this in the u.s. we just haven't done it broadly. we have not changed the federal system, the federal policy, and the federal investment that will allow us to go regionally, have the right data, integrate educational pathways to cree dcials that have value in our labor market and engage in business as the driver to make these things happen. so last but not last, i would say it has huge impact federally and in our new federalism definition because many of the entitlement or benefit programs that are going to be the subject of great debate are actually the intake operations for an integrated educational work force system that leads to employ if we do it right. agreed on -- if recipient in the
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welfare system. all of our disconnected youth and youth development programs, if we can link them early with the right information, to a pathway that leads to a credential and doesn't cost $60 ,000 a jeer year for baccalaureate degree but is a right skilled now that lead to employment and a good salary. we're going to be able to address in a positive way the spite red entitlement reform effort. >> thanks. i think that's a great presentation of the fact that we know what to do. >> know what do. >> now we get to the person who is actually in charge. [laughter] you know, he ran to be mayor of louville, the 16th largely city in the united. no one stole him in the new federalism, the whole pyramid has been flipped. you are pragmatic, nonpartisan. you get stuff done and you come to washington. [laughter]
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describe what you're doing in louville with your university community and skills and educational system. i think it's a model being built for the country. >> thank you. i happen to be a business guy and entrepreneurial mayor right now. i think more as a business person and cofounded the manufacturing company in 1980 and grew it to an internationalling manufacturing firm. i've been able to see it on woat sides and see the interesting transition as well. we talked a lot this morning already what i would say the hard hills. universally whether it's an assembly line worker or engineer. there's as were emphasis on the soft skills required to be a world class player as well as a individual no matter where you are. by soft skills, i mean, the ability on one side to show up regularly. two, are you a problem solver, three, are you team player can you lead and follow? they are skill in this case see
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in high performance companies that have high productivity than the competitors. the teams know how to get together, identify the problems whether they are are big innovation problems or small problems they need to work through, they can innovate more rapidly than their competitors. these are hills that we can teach starting in grade school and high school basic things like data, the collection and analysis and how to be member of team. i don't want us to forget while we go through the technical stuff at the end it's people working together. it's the teams getting things done. we have two great multinational that define our manufacturing base. that's ford motor company with two plants, one manufacturing the escape, the other is the kentucky truck plant. then general electric appliances as well. they are large employers. they invested in the modernization of their plants and ge's case reshoring business to pipeline from mexico, one
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from china. after being out of intensely u.s. dead candidated manufacturing for ten or fifteen years. and so they realized it's better to have the whole supply chain closer together particularly to have r&d closer together. bring back the products to america and now they're in the process of saying what did we lose in the ten or fifteen year period? as mentioned up here, a lot of the manufactures work forces is aging. one of the rock star positions in the manufacturing plant would be an industrial maintenance technician. these guys they are usually guy, they can fix anything. you know, and whether it's a hammer or a computer, they can fix anything. very highly skilled and necessary to keep manufacturing minute plants -- plants running. it was a lost a little bit when america offshore manufacturing and so those skills are absolutely acquired to meat and potato of keeping fact i ares running. so aging work force is a
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challenge as well. we talked about how in manufacturing does not have the cultural attraction it should be we need get back. so that young hot shot in high school said i want to be an industrial technician. that's a really cool career path. i can make $80,000 to $1,000, $100,000. we are in transition that have. solution wise, we start with some high schools that have magnet programs around manufacturing. our junior technical colleges obviously have everything from certificate to full degrees that can be focused on manufacturing as well. i want to emphasize. emily talked about the stackable cree terribles can -- recredential out there already but not taking -- i don't know if it's because people want to have we didn't invent it. we can't use it syndrome, but these stackable credentials are fantastic way to prescreen when you're hiring people.
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and there are a lot of people that want jobs. when ge was hiring 1,000 new people, 12,000 people showed up for the jobs. now of the 12,000. probably about quarter were eligibled or qualified for the job. which is another commentary about the lost maifsz waive of tens of millions of people we have that don't have the skills to compete in a global society. so the stackable credentials, i think are something we need to focus on. that heads to another area that i think as country we need figure out. we're trying to figure out independently locally. what is the power of work force intermediary in today's world as so much big data right now. question go out now and scrape all the job data bases and back with precision and say there's 800 sales opening this week. there's 400 opening. 600 nursing tabtd opening. we didn't have that capability
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just a cup 8 of years ago. -- couple of years. what does it mean for the university and technical colleges? are they anymorability enough to -- nimble enough to respond to the needs of work force that are changing ever faster in the rapidly changing world we're living? that's an interesting process we're in the middle of right now. as i talk to my colleagues at the u.s. conference of mayors. it's a national problem. most like we have it here. we haven't figured how to do it yet. it requires business partnership i'm be frank as a business guy that has beens to be mayor. businesses are busy. and, you know, if government can't respond efficiently and quickly where they have their act together. we have to move on-air done our own thing. we talk about how government can enable. and absolutely a critical role there. it has to move at the speed of business for it to be relevant. unfortunately for bureaucracies,
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the speed of business is ever faster right now. how do we catch up and breakthrough all of that? last point, we just talked about the culture. number one is embracing the fact that if we want to compete in the manufacturing level, global level of quality productivity safety must be begin. how do we get that done with the global way structure out there and result in good middle class jobs for american citizen? it's something i'm concerned about. what has changed the global wage sector. how do we bringing the manufacturing jobs back that result in middle class american wages? ..
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>> so just to summarize what i am hearing, and then we can open it up for it questions. i had a letter, is the positive side. which i still don't think that we have completely understood. even throughout the country. we have some of the smart rules that are coming out of the federal government. we had some other sectors that are fueling innovation, so to speak. we have the best network of advanced research institutions in the world. commercialization of
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information. on the other side of the ledger, there is culture. right? you know, when we look at popular media, we basically see the repetition of the old stigma. and i would put on the other side that some of these really worrisome issues are taking place. in theory what you would want is you would want a national campaign here. you really want the federal government -- we get five states
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come in 10 states, dozens of mayors and county leaders to do with the university leaders want to do. can we have a true renaissance? and income hotties the is playing out? >> no, the action is at the local level. you know, people are not waiting around for washington. i tried to sneak into town to get out of here as fast as i can. the other thing is that we talk about regionalism. in our case, teamed up with lexington. so combine, we are about an hour away from lexington. about a half million people. we figured we should try to figure out how to make more pipe together than steel pipe from each other. the companies are collaborating with each other, so we can figure out on a regional scale how do we improve workforce
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reticence. what is the question that we need and how can we increase our exports. there is a lot to be done at the local level. regionalism is a big part of that. >> yes, in regards to the national campaign, it is not as much about what is said from washington. it is what we free up as economic leaders to do. so if we can't positively legislate, can we get waiver authority to waive the restrictions that we have imposed upon regional economic leaders? and give them an opportunity to respond as they will, because it is their constituents that need those jobs.
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the underlying issue is that spirit i would be remiss if i didn't say that manufacturing was represented on the cost -- sometimes regulatory structures still need to be dealt with. freeing up the governors to deal with the best possible climate for manufacturing jobs. in fact, the universities, they are operating on originality and is all about how they can change, the k-12 system 54% of
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the people who walked in the store can't read -- otherwise let's weigh what we can and take it at the state and local level. >> right, got it. >> the american philosopher michael jackson who once said, if you want change, look at the man in the mirror. >> i was thinking of another song. [laughter] >> because there is a lot of stuff happening. the word is going to spread. the summer i went to whitehall, michigan. we had a big facility there. and we ran into this group of young girls.
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they wanted to know what was going on in the lady that ran the program since you won't believe this. it's the whole society and those society moments. that is one thing.
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we pay for it and we give them the time. there are thousands of things. i encourage everyone who runs for office is to do this. the reason why i think so is that in my view, we definitely have the families, we bring them back in, and it changes the way things go. you suddenly see what great things are going on there. so i think that those levels are essential. you do whatever you want to do. it is starting to spur more of a national debate. this event is very important. understanding the importance, this is gigantic.
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most people, they think about labor costs. it is much more of the level of sophistication that you can do at the rate of innovation and the proximity. the opportunity to your most advanced testimony. we have the energy workforce and the sectors across energy are experiencing much higher levels of retirement.
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>> it is important to see how this is a growing problem. >> two quick things. one is big data idea. that is a really vital talent pool. the second thing related to that is the factors like energy. brazil right now, there is a group of business people and regional government leaders.
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they basically have said energy has become a huge opportunity for us. we cannot wait for the education system to change. there was someone who went around to every single company and asked what is your type like of the next five years of capital projects?
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>> and we can apply this technology in these areas and it is a local and regional area. >> let me ask you all this question. when we go around the country, there is unbelievable energy and advanced manufacturing and there is this other power around really small petite manufacturing which is happening. there is a group at a brooklyn and it is a matchmaking technology. certainly it's not something that you find in a big-box retail, but the matchup in the west. these designers and these made in america factories. you see a desire for this. abc had a piece called made in
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america, it's like a series that they had done. classic series where they went to grand central station and said please take off all the clothing that is not made in the united states and two people agree to do it and at some point, they stopped because it was family television. [laughter] but udc offends -- it is time to look at manufacturing. it is a real movement? how we think about it compared to this? >> when you think about the tools that you have compared to 20 or 30 years ago, you have a lot of tools and it's not like we have a press brake or manufacturing shop, this convergence of all these technologies happen to be making something.
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it is a lot cooler to do that, and it shows you the strength of the american entrepreneur and american economy. when you think about all the waste in washington dc the american ingenuity says we are going to figure out how to do that. leveraging the power of technology and we can get our act together at the federal industrial policy, think about how america can shine right now. we have to have time to talk about that type of thing. including the fiscal cliff and dysfunction. >> fortunately many of the companies are here. related to that is also the
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innovation and if we just do something that is already there for five years, that's not going to make the cut. we have to get it to the next level. >> they actually changed their minds that from mass commoditization to mass customization. that is pivotal on your part in order to keep their markets by rain. so that is one reaction what is happening in the broad manufacturing sector globally. technically this is where the critical gap that we have in our innovation research infrastructure in this country, i think it has a huge impact.
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you know, we've had a lot of basic things subject to discussion. after the basic research in before the traditional venture capitalism that is available, we have early stage production and manufacturing and there is absolutely no financial help and we are seeing innovators with great new technologies. not being able to figure out how to get to where production capabilities. so it is part of the gap in the continuum of research to development. to be able to take advantage of our great innovators and actually move to mass production
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. >> the other thing we were talking about was health care as well. it was one of the most technically interesting areas of the planet. [laughter] >> when even look at the profit margins. [talking over each other] [laughter] >> when you look at how a hospital works, the amount of time that it's been because tools are lost. medicine at work, this sounds like a basic thing. i just think that if we can use the data. they say, can we take some of that silicon valley capabilities and apply to health care? for productivity improvements will be there? i just think that there have
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been certain sectors out there. >> there are small and medium-sized manufacturing. one of the things we are we're worried about is the lack of innovation capacity that are feeding the big guys. this is an area of concern for us as we look at cities and states and the federal government can help with the capacity of the small and medium-sized manufacturers. >> but conversions, integration, the mashup of sectors, it's not manufacturing and little corner. that's what we need to do. it really sort of connects to
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the economy. >> here comes the microphone. >> hello, i am in postgraduate school but i spent 13 years at ibm and was very much involved in getting out of manufacturing world. i was struck by the importance of the narrative for the nation. you need to have tv shows and movies and you need to have children's books. i'm trying to get people to write children's book about process. how did that happen? we don't build and to education, how did that happen? i mean, the structure and process -- all that is missing. i think we need to build collaborative group and am willing to help on any of this because it is a burning issue for me about getting the
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narrative. you have to make it simple to understand. i have worked for think tank and they produce huge reports that nobody reads. reports and nobody has time to read. [laughter] nobody has time to read all this stuff. so i kept sitting here thinking that a website that i would build with each thing that you are doing and making it easy for the public to understand, because if they don't understand it, not much happens. >> we have a communications problem here. >> we have spent billions of dollars on a little magazine that had young people and a whole array of manufacturing
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jobs. and we got more positive feedback from that than anything else and that is absolutely critical. i also think that we have to -- and everyone of these conversations, somebody stands up and says that we need another moment. we need to recognize the moments that happen every single day in the country. >> i looked around and on that debate, and i said pretty much everyone was in engineering. and i said when was the moment he decided you had the spark anyone to go there. everybody mentioned a moment
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kindergarten teachers are shying away from coming close to anything that has to do with natural science because they don't understand that. they are not trained enough. their personal relations -- you did the same thing. you know, where you had a big outreach that was very successful. >> we have a question. >> thank you very much. i am jerry mitchell and i write the mitchell report. this has really been a fascinating panel. and it occurs to me that the next time around, it would be a fascinating panel to have kinds of people that you are talking
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about -- and if we have some pictures and it was visible. [talking over each other] we know about this, but we need to see the shop. i want to ask you can perform an experiment. where you have a kind of magic dollar. it could have as many zeros behind it as you want. your job is to determine which of the many priorities that are necessary to attack the set of issues that we have been talking about. so it could be in
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communications. it could be in k-12. it could be in this data component that you talked about. it could be in the linkage between universities and research. in order to deliver on the promise of this new technology, what are the priorities and what would you put the components of that dollar? >> they say that you are rockstar, we love you. it is part of the cultural manufacturing things. so people think they want to be engineers. but it goes back a little bit
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what you said about looking at manufacturing and engineering as being careers of dignity and respect that is when our country's psyche kind of shifted to a was a lot easier way to make big money faster and much higher profile and industries. this really just doesn't seem to be an attractive way to do something. so we have to regain that. it is going to fuel this growth forests as well. a lot of this is communication. i know mr. jones down the street and he is an engineer.
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>> hopefully you will give me some dollars after that. there is such a gap in people don't know. and i think once people know that they are entrepreneurial enough to figure it out. i just think the data has a little bit of excitement about what these rules are. but some people are just not aware.
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>> [inaudible] only $1 billion in public education, and there it is dealing with baghdad between this and the early stage production for which we can't get venture capital. and we lose technologies to produce. >> yes, i would specify this and i feel that need the data on u.s. competitiveness. not just on u.s. jobs. because the i couldn't agree
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more that we have something like that today, we want to have this quarter growth. you want this quarter growth. late these initiatives on the ground. >> a little money we spend on lifelong learning as a country. we spend all this money on k-12, secondary, we have to keep learning everyday after we have a formal education. we really don't understand it very much as a country and we spend a miniscule amount on it. >> these are the questions that we asked the deficit panel.
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$3.5 trillion budget, and find the money and cut to the chase of what really matters. let's not separate out the conversations. we are going to think about the economy over here and we are going to be little towns over here. ..
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>> they tell you, we are just building a gigantic complex in saudi arabia. and this is the first time they have a full alumina refinery smeltzer and they can ship it right there. so one of my big scares us how we find local people and how we educate them. we are already manufacturing or. i saw how we rented a. it's a very test jobs due. so the interesting thing was the manhunt to do it all from scratch committee occupational training. the thing that was most days was
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the cream simulator, which we originally thought how hugely motivational that was repaired right into the occupational sport so it took seven days a week, 24 hours. the answers straight there. they are sitting in front of pcs and playing games. you can turn that into a positive with these things. it's actually much easier than i thought. >> question here and then back there and that we may have to have other questions. >> by mark roth ski. a group to be a physicist and engineer and the last at least 25 years i've been struggling in various roles in industry, government, not-for-profit and manufacturing at its dates. one of the things that bothered me about this whole conversation on the report is on the census
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says just on manufacturing industries. all important, but the reason the public doesn't cannot does the public thinks of commodity manufacturing. that's within their mind and not so we have lost over the last few decades is capital intensive used to be labor-intensive commodity manufacturing. and that is something that just doesn't happen very easily without some sort of government help in some way. for example, by roadmaps finding the missing ingredient, the missing for technician to fix the scenes. now day the machines. could you address that specific area of what might be done to enhance commodity manufacturing
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works >> energy is a big part of it. i mention the refinery part. the refinery part has nothing special appeared in reality we can do it anywhere on this planet. so it is critically important? if you don't have the maintenance people i can't do it, they can educate them. energy is a huge point there. what is the reason we deliver it as a full plan to a year or so ago is now putting huge amounts of money to build it in texas and someplace those. new refineries also. at the same time, the normal commodity business, the normal low differentiation job will not come back. why would it come back, right
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clicks we have to have differentiation. we have to have innovation. that's what this debate is competitiveness is to import that were not only minute chart and wasting national resources. >> i have a question over here. right there in the middle. >> thank you. susan lunch from the mackenzie institute. i'll keep it short. it's been a fascinating panel. i'm surprised they haven't heard one word all morning, which is exports. my question to all of you is is this manufacturing renaissance for domestic consumption or do you envision the u.s. eventually has an export platform to the rest of the world? and a second later question is if you put on the hot of multinational corporation, whether u.s. headquartered or foreign hen you consider where to put in your next plant, what would be the number one barrier you would point to u.s.
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competitiveness? so this is a little different than the earlier question, which is if you are considering a corporate investment, what would be the number went to you at .2 quite separate immigration, taxes, skills, infrastructure. at that year from from other panelists. >> producing for domestic or global market. >> in our case in this bluegrass roots in kentucky we have a specific program and ask choice for small and medium-sized companies. the big guys know how to do it already appears a part of the american renaissance is creating a culture of experts. vicious what you do. if you're an industry that has an international editor and you don't export, i say to people who probably be out of business in five years. as all types of reasons to figure it out and smaller companies need to understand that. >> igt is my colleague.
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he obviously wasn't listening to what i said in the beginning. this is less than 4% of gdp, but 45% of export. there are these are the draper of it. i think for now it's manufacturing the link and in suvs globally for china will be done in the u.s. i think there's a huge export in colorado. something like 30 countries now with space programs that are moving and someone may want to support, others who may not. argentina has this base program up there in these areas or health care will be another one. i think it's a vitally connect the part of exports. >> most of my research at the manufacturing institute for the past three to five years has shown that the lack skilled
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workforce is always one of the top three manufacturers. we choose a new location in the u.s., but it goes back with the business climate, which goes back to taxes and regulatory structure in the skilled workforce. but they're always in the top three of where they're going to choose their next type. >> all the sites come to point out that the best place to locate a new company in the united states of america is in louisville, kentucky. i will save you a lot of work. were happy to have you. >> say that again and stare into the camera. it's clear you're a businessman in a prior life. first of all, i want to thank the panel because that is so critical, particularly in these panelists are a positive
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conversation about where our economy go. not delusional. based on what is actually happening on the ground because the global dynamics and because of some very, very smart policies and crack this is the metropolitan opera stage scale. thank you very much. [applause] >> in the next thing on the federal debt, the vice chairman of citigroup and ceo of ever core company said the debt ceiling should not be a bargaining chip in the budget talks. also this discussion the president of the committee for responsible federal budget and ceo of procter & gamble. this is an hour 20 minutes. >> either enlisted my vision at that clock layouts, but i'll use my watch. so if everybody could come in from coffee is it down, we'll
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get started on our second panel. and were delighted to welcome a really terrific set of panelists. lewis kaden, maya macguineas, who has been one of the most stalwart leaders here in washington and dealing with debt problems in his now involved in leading our fix the debt campaign. bob mcdonald who is ceo and president of procter & gamble and ralph schlosstein, ceo of ever core. so really terrific career. let me give a little bit of context while everyone is filing into the room. i'm martin daly with economic studies program at brookings. if we countermand spec to the 1960s, the 1960s as they troubled decade. productivity was strong,
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unemployment was low or really almost all of that decade. and that was followed by, i don't know if he failed last decade or month at a much more difficult. economically in the 70s and early 1980s. the thing that hung over the economy time is inflation. we couldn't seem to do at the inflation problem, so we have a deep recession and 74, 75. at another session in 1880. another session in 1981, 82, slick double dip recession. finally, paul volcker, chairman of the federal reserve and his colleagues decided to wreck the economy over the head really hard and take inflation on this one. finally it did, although it took a while. wasn't until the fall in oil prices and 86, but we got rid of the inflation demon and in some ways laid the groundwork for
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that. following that in the 1990s the restaurant part of the growth, strong markets starting in the mid-1980s. so the analogy in my mind as had this deficit now hanging over us and for some of the same reasons, it's a really hard problem to solve. it? a federal reserve come as we don't the equivalent of an actor like paul volcker who can come in if they were going to tackle this problem. this is unpopular, but were going to do it. instead we have obviously the decision be made by congress in the administration and the two different parties that were in the political gridlock trying to do at this difficult problem. even if we had sort of unity of purpose, it would be a hard problem to solve. we are still in the process of recovering from a deep recession that was brought about by a
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financial crisis. still a lot of slack in the economy, so from a standard economicshow mccain seen a few that come up not our demand and growth in the economy i'm so fiscal consolidation goes in the wrong direction in terms of getting us back to full employment, but clearly it's necessary over sometime because the deficit path is not sustainable that were on. so we need to do with the deficit, but not so gross. now this panel is part of our innovation i see her several times and i do want to mention one hopeful note along with the problems that i've just outlined. there are a set of folks, bob gordon, tyler cowen, others who say we've seen the end of growth. no more innovation, no markers. we've now got to settle down to
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do with the fact we're not going to have more growth. i think the evidence is strongly against the speakers in your pack and i'm doing a bit of a plug here. she's the new cases in extra for at brookings as well as direct or at the kinsey institute and he and i are working on our project with the support of others, looking at this question, what are some game changers? what are the ways in which we can get innovation and actually has to get out of this mess on the deficit in a recession start to get stronger growth in the economy? thing that's needed, the thing we didn't have any been the first seven years of this century was innovation driven, output triggering growth. we had restructuring product candidate that we have the hunt for some years now real output turbine innovation and growth finance part of what were looking for in part of this project at brookings and working
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with the mckinsey global institute is open looking for. so that's my plug. beginnings of battering your packet. now let me turn to the panel. it will turn to you, lou, first. now how did the responses to this budget deficits and reform was going on, how do they impact the broader economic policy challenges as he see them from your vantage point have been certified the roller coaster of this recession? >> thank you, martin. let me make two or three points on that. first of all, it's obvious to anyone who's followed database in the last year or so or watch the events in europe the political insurgency is the enemy of economic growth and investment. boosting effects of that on the pace of recovery in the united
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states facing an even more during the last year in europe. at the same time, the dynamic qualities of the u.s. economy also when contrasted with europe and other parts of the world suggest and demonstrate on a regular basis now but the ending the political uncertainty there's a great deal to be optimistic about the good many positives when you look for signs in terms of the prospect of the faster pace of growth and recovery if only the political ones 13 t. were changed by progress on the fiscal balance in the signs are more apparent every day. you look at the positive changes in different segments of the housing market and housing finance notwithstanding remaining challenges.
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you look at the pace of recovery in the auto industry, a market with 14.5 million sales last year and prospect for more this year notwithstanding the overall economic conditions of the country still in the slow recovery is very encouraging. most importantly of all, you see the dynamic quality to the hochberg norell adventure community in this country. contrast that with the lack of any counterpart in europe and you see tremendous benefits have always been a source of the entrepreneurial spirit, a source of strength in this country in comparison to others and things start relief today as the community spread concentration in california to my metropolitan
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centers around the country and the strength of the capital markets at every level of private and public capital raising is very positive. even in the jobs market, the most stubborn negative in the picture of the u.s. economy as he saw in the discussion the last panel, and there's a good deal to be more optimistic about the revival of manufacturing jobs and increase product dignity in the reassuring and other issues that were discussed. the bottom line is confidence is everything in patterns of investment as indeed it is a side a note to: financial services and banking and at the moment, confidence levels remain low and not the discouragement
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to certain kinds of investment. the levels of liquidity are best standing on the sidelines ready to be put to use are very high across the business community and the financial community in the u.s. and the spotlight is on this town and whether our political leaders are capable of resolving this. also on the positive side, while many of us would've preferred a broader framework and there'll be more discussion about that from the other panelists here, the reality we know we do expect why that isn't why they missed an opportunity came down to 2448 hours and were able to only deal with the tax issue. but for the most part, in its history this point in the fact that they were able to do that
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is at least a step forward. an added touch from the summary of the state of play that the president gave yesterday in his lengthy press conference added 600 million to 2,000,000,004 of spending cuts previously and not good put into effect in the last two years and the interest savings on top of that come to a total over all of 2.5 show in over the ten-year period that we owe have gotten familiar with is the measurement. for deficit reform. 2.5 is not all the way to the target of four, that almost every independent group has adopted as a reasonable way to
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stabilize the debt in relation to the growth of the economy. you can make an argument a good deal more, the 4 trillion over 10 years is not a bad target and 2.5 is a fair bid they are and so we move to the next chapter, which promises to be messier, uglier, nastier than the first one. but i think there is some room for optimism because as we saw the first time around, i think after the election both parties at the leadership level recognized and came to a conclusion that it was in their interests, and their political interests longer-term to resolve this. it doesn't mean that they like each other. it doesn't mean necessarily that they communicate effectively every day. it doesn't mean that the process is neat and clean, but it's a
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fundamentally important starting point. but the if the politics can miniaturize short term, is very difficult in our government, it remains true that the four or five people who count of us have come to a conclusion within all of their interests to resolve this. so my own view is to be a bit on the optimistic side as we go and to the next. however, to put in the context of economic policy challenges as martin's question did, i start with the proposition that necessity does not equal sufficiency. deficit reform is critical at the moment. we all know that, at her and talks about it or writes about it on a daily basis. but it's not sufficient to meet
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economic challenges we have because the fact is we have a fiscal deficit, but we have many other deficit, some of which were discussed in quite an affect fashion in the last panel. salt is the same for now to make go back later. we have an education deficit. we have a skill development deficit closely related to education. we have an infrastructure development and repaired deficit spending are missing important proportions and you need only look at other countries coming out of the recession including countries with different political systems than rcc the close relationship of infrastructure investment and development has on the likelihood and pace of recovery
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from the severe global downturn. we also have it's not a deficit, and important and urgent need to address the issue of energy dependent and opportunity but more than ever before is sitting in front of us ready to be an in the next year or two. pedicab, requires leadership and initiative in washington and immigration reform, again the subject discussed before. one more word finally about the process. and for this i kind of go back to a much earlier part of my life when i was a professor of law at columbia and one of the subjects i taught every year was negotiation. negotiation abraded context of the national two commercial and
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transactional to labor-management disputes. i came out of that experience with the practical experience before and after, believing it is in this date to keep score on a daily basis in difficult negotiations, especially in the political environment, where each participant has multiple constituencies to which they are accountable in some fashion and paying attention to. please take the last few days, clearly in a state of play that involves positioning and we can be critical -- it's easy to be critical about why it's the reaction everybody always have in the labor dispute thereby can't they just get in the room. they know the range of substantive outcome.
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it's not a secret. it's not hard to find. why can't they do it this afternoon? similar events in fiscal negotiations, aberrant says why can't they get people around the people and in the rest of her this afternoon and resolve that? the sensitive outline has always in there. it's been there in every public and private group. it's been there in every private conversation with small groups of members of congress from both sides. it's not a lucid at the details can be complicated, especially on issues like health care costs, but the broad outlines of the resolution of these problems are not hard to define and we know that, but look at results of the discussions in the summer 2011 and results of the discussions in december was barely 100 or $200 billion over a 10 year period and the
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principle is they couldn't quite bring it to a conclusion. it's important not to score that way and look like they like talking to each other or why haven't they met more often in the early stages another rather to see this is a messy process that's going to unfold over the next weeks, eight weeks and the important thing is that if they get to the finish line this time. not how it's unfortunate we have to go through that process to take a toll in terms of economic dignity, but the price of not reaching agreement is far more significant than that process. do i take some once again in the fact that every conversation i have with anyone who matters more than most of us do in this process, d.c. both political and
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national interest advantages to their side of the debate in reaching a resolution. one has to hope they do a timely fashion. one final comment i think probably all of us would agree at some point in the future will get a consent this on this local process that the debt ceiling has no rational place in this. the president addressed that yesterday, but the fact is playing russian roulette with the u.s. economy and well-being of our population has no place in an honest debate about how much ending should be cut, how much investment should be made to address these rather economic and social deficit and how to resolve this and get on to other
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parts of the national agenda. sooner or later the congress and the president will agree. so approach to this and senator mcconnell's comments in the last couple of weeks and the president that the key controls and the authorization process and the ability to pay those bills through the revenue services are partly not to be attached to the decision to send, not used as the point of leverage in broader and more important negotiations. >> thank you. can i just follow up and i don't know if this is a little bit of a tangent, but i want to ask you because your position and the financial site here come the same search and he is holding back recovery and i agree with
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you completely. do you think funding is also? i mean, we note the missing piece of this recovery's business hiring, business investment. large businesses have favorable access, but small and too many businesses do not. you can lack of funding and assist the legacy of the recession? is the son name has come out for the financial regulation? d.c. that is part of the problem? >> itunes, unlike some of that peers and competitors not to push my way on the regulatory. all of a sudden specific issues, definitions we would do differently in the opinions we waste every day. but the core elements of the regulatory reformcommon around the world are necessary coming out of the experience we had in


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